Self Employed, Injury cant work... Loans

Discussion in 'Mortgage arrears & negative equity case studies' started by makooy, Oct 11, 2017.

  1. makooy

    makooy New Member

    Hi all,

    I've currently got 3 business loans (personal guaranteed), overdraft and credit card.. the 3 loans, I have about 18 months left.

    my business involves me working physically and the loans were taken out on the assumption of me physically being able to carry out the work form now til eternity. When I have to subcontract, the income is far less as you can imagine.

    Problem now is that I can no longer carry out the work due to injury and certainly not to the extent that i would normally.. in order to keep the business going, i have to sub out the work, which of course leaves me with very little.

    Im struggling now each month to meet loan repayments, havent missed any but it is causing me a lot of stress.

    Im just wondering if anyone else has been in same shoes, is it worth renegotiating the loans for a less amount over a longer term because of my health?

    Problem is I have the 3 loans, OD and CC. I asked the bank for a temp overdraft last month, something i would have no problem getting straight away and have got many times before but was declined so im not sure if the bank would be up for any renegotiation.. also because i have been strapped with these loans for 3 years now, i want to clear them and dont want to be stuck with them for another 5 years starting a new loan..

    I also have a personal loan out, overdraft and credit union loan out too.. these avenues are closed

    Things are starting to get hot as i am unable to pay the sub contractors plus i have revenue and sheriff right up my backside, cant see any way out..
  2. Brendan Burgess

    Brendan Burgess Founder

  3. makooy

    makooy New Member

    Income details
    Net monthly

    Income self:self-employed
    Income history: Injury since January 2017
    Net monthly income partner/spouse: nature of income
    Income history:
    Amount of child benefit received 0
    Amount of Mortgage Interest Supplement received 0

    Personal circumstances so we can calculate your reasonable living expenses
    two adult family
    Do you need a car for work or do you use public transport? - Work
    Number of children: 0

    Home loan
    Lender: Ulsterbank (wife morgtage)
    Amount outstanding: €50,000
    Value of home:€750,000
    Interest rate: specify whether tracker or SVR or fixed rate
    Monthly repayment none, paid by father in law
    Amount in arrears none

    Summary of discussions and agreements with the bank
    none as yet

    Credit Union
    Amount of shares: 2,500
    Amount of loan outstanding 14,500
    Monthly repayment 400
    Term left 36 months

    Other loans and creditors -
    Business Overdraft - amount outstanding: €-4,500
    Personal Overdraft - amount outstanding: €-700
    Credit Card - amount outstanding: Business: €700
    Credit Card - monthly amount you are paying: €200
    Term loan Amount outstanding €38970
    Term loan term left 18 months
    Term loan - monthly repayment €1499
    Term loan - interest rate 6%
    Personal loan - amount outstanding €9200
    Personal loan - monthly repayment €215
    Pension - monthly €250
    Office Rent - €650

    Other savings and investments

    Do you expect any lump sums in the medium term future?

    Redundancy, inheritances, injuries awards.
    €0 none, no savings

    How important is retaining the family home to you?

    I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it.

    Any other relevant information

    What is your preferred realistic outcome?

    my outgoings are almost €2000 every month covering 5 loans (business and personal) due to injury i am no longer able to work as often
  4. Joe_90

    Joe_90 Frequent Poster

    What age are you?
    What is the potential for you to return to work?

    If you owe €100k on various loan and have minimal income in the longer term I think trading down has to be a strategy. €750k sell up pay off all the loans and buy something smaller much less stress.
  5. makooy

    makooy New Member

    Thanks I'm 38, I am still running the business but not making anything as I have to sub out the work, I won't be able to return to work like I was before indefinitely. I have another business that I am able to do full-time and building on that but it's not making enough to live on, I'm living Day to day with my wife covering everything - bills, food etc

    The house is in my wife's name, she won't sell as much as I've been hinting at it for the last while..if it was my decision we would be selling it and moving someone smaller no kids but 1 on the way which is going to add to my financial issues
  6. Brendan Burgess

    Brendan Burgess Founder

    Is this correct?

    You have around €64,000 in unsecured loans in your own name.

    You have very little income.

    Your wife has a home and mortgage in her own name.

    Has you wife an income or is she relying on family money?

  7. RedOnion

    RedOnion Frequent Poster

    Are these businesses structured through Ltd companies, or as sole trader?
    Does the business you won't be able to return to have much value to sell on to someone else? Are there assets that are linked to the loans?
  8. makooy

    makooy New Member

    All Loans are secured
    Yes very little income
    House and mortgage is my wife's name but her father pays it each month
    My wife is co director of my business but with no involvement, she works full-time and has her own income €800 p/w

    She is going on maternity leave in December
  9. Brendan Burgess

    Brendan Burgess Founder

    Hi makooy

    This is very confusing.

    What are the loans secured on? What assets do you have?

    "secured on" means for example, a mortgage is secured on a house. If the loan is not repaid, the lender can repossess the house and use the proceeds to repay the loan.

    Term loan Amount outstanding €38970
    Personal loan - amount outstanding €9200

    The term loan is your biggest loan. Is the loan
    1) In your sole name
    2) In the name of makooy Limited
    3) in the joint names of you and your wife

    What is it secured on?

  10. kaiser1

    kaiser1 Registered User

    I think you need to have a frank discussion with your wife. You have alot of debt that looks too much for your earnings (which dont look like it will improve in the short term).
    You say the house is in your wifes name, but you are married so legally its now owned by the both of you.
    I can understand your wife does not want to uproot while pregnant / move to somewhere else that might be deemed lower in value/prestige but you really need to discuss this.

    It would clear all your debt, reduce your stress and give you the freedom to start again when you are in better health, by the way a new baby will add in alot of stress and joy into the mix both physically and mentally!

    good luck!
  11. makooy

    makooy New Member

    Limited company 90% me, 10% my wife
    The business has an established name, and would be an ongoing concern. The right person could take it over, this would be my preferred option to sell or move the business on. The industry is not regulated and competitive, think car valet or window cleaner - I have tried to get subcontractors interested which they are but to no avail. None of them would have any capital, it's a very cash orientated business.. one that I relied on for my bread and butter.
    There are little to no assets relating to the company, it has acted like an agency for the past year. I take in job get someone else to do it, make a small %
  12. makooy

    makooy New Member

    Hi Brendan

    Sorry im getting mixed between personal guarantee and secured on. I thought they were the same.

    The Business Term €38970, was personally guaranteed at the time with myself and my wife as co-director 3 years ago. Not secured on the home but they took into account she was a homeowner.

    Personal loan €9200 is a personal guarantee from me..not secured on the property, no involvement from my wife

    1) In your sole name - No the company name
    2) In the name of makooy Limited - Yes
    3) in the joint names of you and your wife - Yes, as co directors
  13. Brendan Burgess

    Brendan Burgess Founder


    You need to go to a Personal Insolvency Practitioner

    It seems to me that as you have no assets, you can go for a Debt Settlement Arrangement or bankruptcy and get rid of your debts.

    However, if your wife has guaranteed the €38,970 or any other loan, she will be responsible for the full amount. She can't go bankrupt as she has so much equity in her property. The lender will get a judgement and may actually register it against her home, but they are unlikely to enforce it.

  14. makooy

    makooy New Member

    Thanks, we discussed last night.. we are going to meet with bank on Friday to see what they can advise about any consolidation of the loans and spread out over X amount of time.. this is something i dont want to do as there is only 18 months left but her thoughts are that there is not enough business to manage the next 18 months
  15. cremeegg

    cremeegg Frequent Poster

    Hi Makooy,

    I don't think that you are ready to have more than a very initial discussion with the bank.

    You are not at all clear in your own mind what the present position is. There are a number of points you have raised which do not fit in with the over all picture. Let me quote the ones I am unclear about.

    How much do you owe Revenue, what stage is it at. How much do you owe sub-contractors.

    What is this pension and office cost.

    You need more clarity on your situation for yourself and to get more advice here.

    Strategically I suggest

    that your wife should resign as a director of the company, she needs to move herself as far away from the business as possible

    that you should try to keep the house, with a mortgage of somewhere between €50k and €114k and your wife income of €800 per week the mortgage is not excessive, that is before any support from father in law, or any future earnings you may have.
  16. makooy

    makooy New Member

    Hi thanks

    Revenue is about €2k, Sheriff €3k (postdated cheques) and sub contractors at this moment around €2,500

    Pension is an self employed executive pension I setup about 2 years ago.
    Office is a shared office in town place of work but I am finishing up here at the end of the month and going to be working form home.

    I was thinking this, The only route I can see beyond bankruptcy or a PIP is to meet with bank and try and restructure all loans into a considerably lower monthly repayment.. i think that having my wife as co director is the only leverage(sic) i would have in any negotiations with the bank..

    Yes this is all correct, her parents have been considerably supportive with the house and other day to day financial support, my family are not in the picture.
  17. goingforgold

    goingforgold Frequent Poster

    Very clear that you need to either a: go down the bankruptcy/insolvency route or b: sell and trade down your house. You are 38 and both you and your wife are very wealthy in terms of the equity in your house. You really don't need to have financial stress in your life when in such a fantastic position overall. Eg, you could live in a 400k house mortgage free, clear all debts and have ~230k in the bank...enviable
  18. makooy

    makooy New Member

    Hi folks

    Sorry for the delayed response sorting out a few things.. thanks for all your input and suggestions.

    My wifes house is not up for discussion, it has the value and the low mortgage but it is not going to be sold. if it was my decision yes it would be sold but its in her name and it wont be going anywhere, went down that road.

    About my work, I am self-employed with 2 jobs - 1 as a musician which i can work at anymore (i have tinnitus and hearing loss), i relied a lot on this side of work as it was work every weekend, pulling in 2k per month. - 2 my other job is a web and graphic designer, i work freelance and this is my day to day job, amounts vary but around the same amount €2k each month.


    This is what I've done to get myself back on track..

    Business Loans x 3 = 38970. I spoke with the bank and they have agreed to restructure the loans as one over 5 years, reducing monthly payment to €750
    Credit Union = 400. Spoke with them and reduced my standing order to €200 per month
    Pension = 250. Suspended pension
    Personal Loan = 215. Nothing i can do here, loan only taken out in May.

    Outstanding to Revenue, Sheriff & Subcontractors = 4.5k. Paid subcontractors with savings and gave sheriff post dated cheques over the next 4 months.

    Starting Nov 1, my outgoings will be
    €750 Business Loan
    €200 CU
    €215 Personal Loan
    €300 Sheriff
    €1465 instead of €2149 each month + Revenue debt.

    Still have overdrafts to deal with but at least i dont need to go bankrupt and gives me some space